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Government's self-employment support scheme extended – what you need to know

Government's self-employment support scheme extended – what you need to know

The Government's Self-Employment Income Support Scheme will be extended and will pay out another single grant covering three months, the Chancellor has announced today. He also said this will be the final grant from the self-employment scheme.

Those eligible for the Self-Employment Income Support Scheme (SEISS) will be able to claim the additional grant in August, which will be worth up to 70% of their average monthly trading profits, though it's capped at £6,570 overall. The money will again be paid out in a single instalment covering June, July and August.

You can read full details on how the changes will work below.

Not sure what the self-employment support scheme is, or whether you're eligible? See our Coronavirus Self-Employed & Small Limited Company Help guide for full information.

Watch: Martin's view

Before you get into the full detail below, here's MSE founder Martin Lewis's analysis of today's announcement:

Embedded YouTube Video

How will this second grant for self-employed people work?

The SEISS – which gives a Government grant to self-employed people whose businesses have been adversely affected by coronavirus – opened for applications on Wednesday 13 May. It initially covered three months (March, April and May) and the grants were worth up to 80% of profits, capped at £2,500 per month, or £7,500 in total. If you're eligible for the scheme you can still apply for this first grant, but the Government's now said that you'll need to do so by Monday 13 July.

Applications for the second grant will open in August. It'll be worth 70% of average monthly trading profits, again paid out in a single instalment covering three months' worth of average profits (June, July and August), though this time it'll be capped at £2,190 per month, or £6,570 in total.

The eligibility criteria are the same for both grants, and you don't need to have claimed the first grant to receive the second grant. We've full information on eligibility criteria for the scheme in our Coronavirus Self-Employed & Small Limited Company Help guide, but in brief:

  • Your average trading profit must be less than £50,000/year. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won't be able to get any support from this scheme.

  • You must earn more than 50% of your total income from self-employment. This must have been the case for either your 2018/19 tax return or, if not, the average of your 2016/17, 2017/18 and 2018/19 tax returns. Income from property, dividends, savings, pensions and taxable benefits all count as 'non-trading income' and qualify for the SEISS. The total of these combined must NOT exceed 50% of your total income. For more information on which benefits count as 'taxable income', see our full list here.

  • Grants are based on your profits over three tax years. They are based on an average of the tax returns for 2016/17, 2017/18 and 2018/19.

  • You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. The last possible moment to file a 2018/19 tax return was Thursday 23 April (the deadline had been extended from 31 January 2020). If you only had a few months' self-employment on your 2018/19 return, this will be counted as your total profit for the year – the Government won't pro-rata it based on your monthly profits.

What does the Government say?

Chancellor Rishi Sunak said: "Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.

"We stood behind Britain's businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

"Now, as we begin to reopen our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world."